compliance and sanctions - joanna grynfelder - bank alior
TRANSCRIPT
SWIFT Warsaw Business Forum 2015
Financial Institutions and OFAC Sanctions
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ABOUT THE BANK
• We began operating in November 2008 as bank of a new type – combining traditional
banking rules with innovative solutions and products. • In December 2012, shares of Alior Bank made their debut on the Warsaw Stock
Exchange (WSE). The debut was preceded by an initial public offering valued at PLN 2.1 billion – this was the largest IPO of a privately-held company in the 21-year history of the WSE.
• Since 21 March 2014, the bank’s shares are traded on the WIG20 index.
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FI & AML IN POLAND - THE LEGAL AND THE REGULATORY FRAMEWORK
• reporting information on SARs (quantity and legal basis for statistic purposes
• reporting illegal investment activity • providing with information on account holders and their activity • interpretation on legal requirements • respecting santcions • reporting SARs for further investigation • providing with information on account holders and their activity • reporting all transactions over 15000 EUR • asking for an interpretation on legal requirements • asking for a permission for transactions (embargos, sanctions) • dealing on daily basis, mutual cooperation • account blocking and assets freezing • reporting SARs for risk assessment • asking for a permission for transactions (embargos, sanctions) or relations
with (PEP) • dealing on daily basis, mutual cooperation • dealing on daily basis, mutual cooperation on investigation and an
account blocking • providing with information on account holders and their activity • reporting illegal investment aktywisty • reporting frauds • dealing on daily basis • respecting internal compliance policies and local requirements
Polish Financial Supervision Authority - KNF
Polish FIU GIIF
parent company located abroad
police, court, prosecutor office, state agencies
coresspondent bank
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FI & AML IN POLAND - THE LEGAL AND THE REGULATORY FRAMEWORK
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All financial institutions in Poland are regulated by the General Inspector of Financial Information (Generalny Inspektor Informacji Finansowej) located in the Ministry of Finance. http://www.mf.gov.pl/en/aml-ctf/news Additionally Polish Financial Supervision Authority (KNF) performs reviews of the adequacy of AML procedures. www.knf.gov.pl We do respect EU regulations and FATF recommendations, including sanctions and embargos U.S. sanctions are respected by all companies dealing with U.S. No $ transfers are allowed for the beneficiares from the SDN list.
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A
2014
GIIF inspection
2011
Bank was fined by GIIF for failing AML obligations on transactions reporting Bank improved AML procedures and finished corrective action plan.
March
2012
2013
KNF inspection confirmed that bank is in compliance with AML requirements and regulations
In 2009-2010 Bank failed AML regulations related to registration of transactions
October
September
GIIF inspection
Post inspection protocol issued by GIIF did not require to take corrective actions
March
OUR LESSONS LEARNED
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KYC PROCESS
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KYC PROCESS – GENERAL RULES
„MUST HAVE”:
• a sophisticated fraud/sanctions detection system working online • well trained staff (don’t forget about Board Members!) • experiennced AML analysts • internal regulations • risk approach
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KYC PROCESS – GENERAL RULES
WE DO NOT PROVIDE ANY SERVICES TO:
• Shell banks • Financial institutions cooperating with shell banks • Entities from sanction lists • Individuals/companies located in tax heavens • Individuals/companies located in high risk countries • High risk activity companies (military/scrap metal/gold) • Entities with a complicated organizational structure • Companies from KNF Public Warning List
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THE ROLE OF COMPLIANCE IN THE KYC PROCESS
Advis
ors
•risk assessment based on information provided by business
•risk mitigation, suggestions and advices
Analy
sts
•risk assessment based on information gained by compliance
•reputation as the main important factor
Ris
k takers
•KYC and PEP approval
• derogations
Alior Bank’s KYC regulations are in compliance with 3rd AML Directive, EU requirements and resolutions and with Polish requirements. It is allowed by Polish FI to establish its own, more restrictive regulations on KYC, due dilligence or risk evaluation.
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OFAC SANCTIONS IN EUROPE – THE LAW
Regulations OFAC has jurisdiction over all U.S. persons: • citizens and permanent resident aliens located anywhere in the world, • individuals and entities located in the United States • corporations organized under U.S. law, including foreign branches and
representative offices abroad • foreign corporations and companies physically located in the United States are also
included • foreign subsidiaries of U.S. companies can be subject to U.S. sanctions • US $ transfers are prohibited All U.S. businesses are required to comply and ensure all sales (even in the U.S.) do not violate the OFAC laws and regulations. OFAC sanctions have recently been expanded to certain non-U.S. entities. If foreign entities want to do business in the U.S., they are going to have to comply with U.S. sanctions. Similarly, U.S. sanctions can also affect transactions routed through the U.S. financial system such as a wire transfer through U.S. financial institutions.
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OFAC SANCTIONS – THE LAW
OFAC maintains a list of governments, entities, and individuals who OFAC has designated as Specially Designated Nationals or “SDNs.” U.S. persons are prohibited from transacting with SDNs without a license. Once OFAC has identified and named an SDN, OFAC places it on the Specially Designated Nationals List or “SDN List.” This list is updated regularly and can be found and searched on OFAC’s website at http://sdnsearch.ofac.treas.gov/. Depending on the program, if the assets of an SDN enter into the U.S. or the U.S. financial system, those assets may simply be rejected, such as a U.S. bank rejecting a wire transfer, or the assets may be “blocked.” Blocking means that while the owner retains title to the blocked or “frozen” property, OFAC immediately imposes a prohibition against transfers or dealings of any kind. For example, if a blocked entity’s money is wired to a U.S. bank, the bank must freeze that transfer until receiving authorization from OFAC. OFAC can freeze assets indefinitely and the money remains untouchable. OFAC administers and enforces a series of regulations and executive orders that impose economic sanctions against hostile targets in furtherance of U.S. foreign policy and national security objectives. These targets include foreign governments, individuals, entities, organizations, and practices. Some more obvious examples include the governments of Cuba, Belarus, and Iran, terrorists, drug traffickers, front companies linked to the drug trade, and charities linked to terrorist groups.* * www.treasury.gov
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OFAC SANCTIONS – THE LAW
Penalties Penalties for violating OFAC regulations: • criminal fines and civil penalties under the Trading with the Enemy Act (“TWEA”),
under which Cuba Sanctions are based, and the International Emergency Economic Powers Act (“IEEPA”), the basis for many of the other programs, can be as high as $1 million or twice the gain from the violation – whichever is greater.
• individuals who violate TWEA and IEEPA are subject to prison sentences as long as 10 and 20 years respectively.
• Black Lists (FI from the list is treated as a high risk entity) • termination of the correspondent account • reputation risk (no one wants to deal with a company from the Black List, even
customers) • compliance risk • operational risk (it is not so easy to establish a new coresspondent account)
WARNING!
• BNP Paribas – $963 million agreement with OFAC – 2014 • Commerzbank AG - $ 145 milion agreement with OFAC - 2015
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HOW TO BE IN COMPLIANCE WITH SANCTIONS?
• internal regulations • SDN, ONZ, UE, SWISS sanctions screenings online (in/on transfers) • check the names of all parties of an international transaction against all U.S.
government lists of restricted parties and other sanctions & embargos • ensure products and services are not ending up in embargoed countries • check OFAC’s website for updated country summaries • trainings • consistent and clear communication to the customers • best execution policy and the coresspondent account terms & conditions • the relevant provisions in contracts with customers
Even when EUR transfers for SDN list’s listed entities are allowed - please bear in mind the payment can be stopped. Forever.
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OFAC SANCTIONS – A SHORT STORY
• A company form Poland (an oil industry) has beed trading with Russian companies
since 2009.
• In 2011 companies (beneficiaries) were covered by OFAC sanctions.
• Since 2011 transfers were processed in EUR
• In 2015 a correspondent bank refused processing transfers based on its own
compliance policy
• All correspondent banks refused „OFAC transfers”
• Since April 2015 Alior Bank AML & sanction policy does not allow to process any
transactions for enities form the OFAC list.
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2017
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2016
THANK YOU FOR YOUR ATTENTION! I ENCOURAGE YOU TO ASK QUESTIONS